T2-PALE

The role of intermediaries in international trade is increasing. Broadly defined, intermediaries act as a link between different parties in an agreement or transaction. This may include links in supply chains or specialized firms that assist manufacturers dealing with foreign markets. The purpose of this study is to analyze the importance of wholesalers, a specific type of intermediary, in terms of imports in Canada. In the United States 56% of firms that import are in fact intermediaries, accounting for the purchase of 24% of total imports. Information regarding intermediaries in Canada is scarce. Firm-level imports, either intermediate or finished products, can be categorized into direct and indirect imports. Direct imports are: (1) inputs purchased by manufacturers that are to be used in the production process, and (2) finished products purchased by retailers for the purpose of being sold to consumers. Indirect imports are intermediate products and finished products bought by wholesalers for resale to manufacturers or retailers. Thus, importing firms can be allocated to one of the four following bins: (1) direct importer – manufacturer, (2) direct importer – retailer, (3) indirect importer – wholesaler, and (4) mixed importer (i.e., both direct and indirect importer). This research paper will document the importance, characteristics, and determinants of each bin. As a secondary goal, this paper will investigate intermediation with respect to the United States and the North American Free Trade Agreement (NAFTA). This aspect is relevant since intermediaries possess a greater advantage over direct importing when the barriers to trade are more significant.

Data link: T2-Leap combined with import trade data, 2002-2012

This project will explore the technological frictions that firms face when adjusting their capital and labour. These frictions, known as adjustment costs, limit the ability of firms to optimally set their input allocations. Using an administrative firm level dataset from Statistics Canada, a three-factor structural model is developed to estimate the adjustment costs of buildings, machinery & equipment, and labour. The project highlights the degree to which these adjustment costs differ across inputs and explores interrelations between them. These interrelations are important because they provide an additional channel through which fiscal and monetary policy can affect the factor demand of inputs.

Canada is one of many countries that provides additional support for research and development (R&D) that is undertaken by small firms. This approach is justifiable if the R&D spillovers from small firms are greater than that of the spillovers of large firms. R&D spillovers may be defined as either the involuntary or voluntary transfer of technological information between firms.  While R&D spillovers may be beneficial for one firm and harmful for another, they generally have a positive impact on the economy. Spillovers may vary by the size of the firm that is performing the R&D due to a variety of reasons. For example, smaller firms may have a relatively more difficult time protecting their intellectual property. The most recent estimates of R&D spillovers in Canada were determined approximately thirty years ago by Jeffrey Bernstein (1988). Furthermore, these estimates do not take into consideration the size of a firm. The purpose of this study is to fill the gap in this area of research by providing an up-to-date estimate of R&D spillovers and determine whether such spillovers vary by firm size.

Additional data set: Scientific Research and Experimental Development (SR&ED)

We aim to understand how providing access to affordable childcare can affect economic productivity. We know from a wide body of academic literature that child-rearing responsibilities impose a severe penalty on the careers of working women, and governments have occasionally attempted to address this by providing public subsidies for universal childcare access. We study one prominent example of such a subsidy program, in which Quebec introduced a generous universal subsidy in 1997 that limited childcare costs to five dollars per day. The specific implementation of the program allows us to compare working mothers with children who are narrowly eligible versus narrowly ineligible for the new program. By comparing otherwise-similar individuals with differing levels of access to childcare, we can estimate how access to childcare affects the future productivity and career trajectories of the individuals affected. We also study whether this subsidy improved the productivity of firms by comparing Quebec to Canadian provinces that did not introduce any new subsidy programs. Our research will provide future policymakers with a better understanding of the costs and benefits of childcare subsidy programs.